Food for thought...
By John Cassels and Jessica Burns
It doesn't take a genius to work out that food prices have shot up significantly in recent years. Coupled with rising prices, volatile commodity markets and horsemeat scandals there are concerns about the functioning of the overall food supply chain.
For competition law, this has meant increased enforcement action and close monitoring of food markets. Remarkably, since 2004 National Competition Authorities and the European Commission have undertaken over 180 antitrust investigations, 1300 merger control proceedings and 100 market monitoring actions in the food sector.
The focus has been on horizontal infringements - price fixing, market and customer sharing and exchange of confidential information. In 2013 alone:
- A €20 million fine imposed on Nestlé SA by Germany's Bundeskartellamt for exchanging information in the hot drinks, pet food and frozen pizzas markets - a double whammy for Nestlé, whose German subsidiary (with 10 other companies) was fined €60 million only a couple of months earlier for price fixing
- Fines for cartels in the delicatessen pork meat sector by the French Autorité de la concurrence for limiting production, fixing prices and exchanging information
Yet, the focus is broadening. Since DG Comp's ‘Task Force Food' was set up in 2012, we have witnessed:
- The launch of the Commission's Retail Action Plan and Green Paper;
- New powers for the Italian Competition Authority to inspect commercial relationships in the food supply chain
- New regulations in Spain governing the contractual relationship between producers and retailers of raw milk, milk and cheese
These latest measures share a common rationale - to tackle the imbalance in bargaining power between producers and retailers e.g. through unfair trading practices. In other words, they aim to protect the weaker party in the contractual relationship.
In practical terms, they reflect a clear move by competition authorities to intensify enforcement throughout the supply chain. For companies, this brings a heightened risk of embroilment in competition investigations.
If you would like to discuss these issues, please do not hesitate to contact John Cassels at firstname.lastname@example.org or Jessica Burns at email@example.com.